The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Liberty Global’s acquisition of the controlling equity stake in the Bahamas Telecommunications Company (BTC) has yet to be approved by the Christie government nine months after the deal closed.

The revelation is contained in Liberty Global’s annual 10K filing with US regulators, which discloses that its acquisition of Cable & Wireless Communications (CWC) last year is still awaiting regulatory review and approval in the Bahamas and several other Caribbean jurisdictions.

“Most recently, the CWC acquisition triggered regulatory approval requirements in certain jurisdictions in which CWC operates,” Liberty Global disclosed to its shareholders and broader capital markets.

“The regulatory authorities in certain of these jurisdictions, including the Bahamas, Jamaica, Trinidad and Tobago, the Seychelles and the Cayman Islands, have not completed their review of the CWC acquisition or granted their approval.

“While we expect to receive all outstanding approvals, such approvals may include binding conditions or requirements that could have an adverse impact on CWC’s operations and financial condition.”

Liberty’s purchase of CWC, which acquired the controlling equity interest in BTC for $206 million via the 2011 privatisation, was completed on May 16, 2016.

This means that the company controlled by renowned cable TV pioneer, John Malone, has been waiting exactly nine months for the Christie administration to approve it as the Government’s new partner in BTC.

Stephen Bereaux, acting chief executive of the Utilities Regulation and Competition Authority (URCA), yesterday said the communications regulator had completed its side of the Liberty/BTC approval process.

“That’s nothing to do with the regulatory approvals from URCA. They’re not waiting on anything from URCA,” Mr Bereaux told Tribune Business of Liberty’s 10K filing.

URCA’s only role in handling such mergers and acquisitions is to determine whether the ‘change in control’ of the purchased entity, in this case BTC, will have a negative impact on communications industry competition.

Mr Bereaux’s comments, combined with Liberty’s 10K filing, imply that it is the National Economic Council (Cabinet) and Investments Board approvals that are awaited. It is unclear why there has been the nine-month delay indicated by Liberty, as Khaalis Rolle, minister of state for investments, could not be reached for comment yesterday.

However, Liberty indicated its unease at having governments as equity partners in the communications companies it owns/operates.

“In several of CWC’s key markets, including Panama and the Bahamas, governments are CWC’s partners and co-owners,” its 10K filing said.

“Consequently, we may not be able to fully utilise CWC’s contractual or legal rights or all options available, where to do so might conflict with broader regulatory or governmental considerations.”

Meanwhile, Liberty said Hurricane Matthew’s impact on BTC’s network and the Bahamas in general would likely cut the latter’s 2016 fourth quarter operating income by $4 million.

It pegged the damage inflicted on BTC’s network and infrastructure at $40 million, with some $22 million in repair work conducted during the three months to end-December 2016.

Warning that Matthew’s financial impact on BTC would linger well into 2016, Liberty said: “Our fixed-line and mobile networks in the Bahamas suffered extensive damage as a result of Hurricane Matthew. Although many of our customers experienced significant outages as a result of Hurricane Matthew, service to the majority of our fixed-line and mobile subscribers has now been restored. 

“We estimate that Hurricane Matthew resulted in reductions to our revenue and adjusted [operating income] in the Bahamas during the fourth quarter of 2016 of $2 million and $4 million, respectively.

“In addition, we estimate that property and equipment additions required to repair our fixed-line and mobile networks in the Bahamas will aggregate up to $40 million, of which $22 million was incurred during the fourth quarter of 2016,” Liberty added.

“Although we expect the adverse impacts on our revenue and adjusted [operating income] from Hurricane Matthew to continue during 2017, we expect these impacts to progressively decline over the course of the year. 

“Although we have property and business interruption insurance that we expect will cover a significant portion of our Hurricane Matthew losses, no assurance can be given as to the amount and timing of the insurance proceeds that we will ultimately recover.”

Liberty also warned that BTC’s yields and margins were set to come under “significant” pressure as a result of the end to its mobile monopoly, and the arrival of Aliv, the new operator that is controlled by its major competitor, BISX-listed Cable Bahamas.

“Significant competition, together with macroeconomic factors, has adversely impacted our revenue, RGUs (revenue generating units) and/or average monthly subscription revenue per average cable RGU or mobile subscriber, particularly in the Netherlands, Barbados, the Bahamas and Trinidad and Tobago,” Liberty said.

“In the Bahamas, where CWC had previously been the only provider of mobile services, competition has increased significantly due to the commercial launch of mobile services by a competitor during the fourth quarter of 2016.”

CWC, which is now part of Liberty, confirmed that it was discounting and using promotions to bolster its subscriber base to over 315,000 in the three months to end-December 2016

“In the Bahamas, we grew subscribers across mobile, video and internet products year-to-date,” CWC said.

“Momentum is steadily building in our video RGU base through penetration of our newly constructed Fiber-to-the-Home (FttH) network. Despite the entrance into the market of our first mobile competitor in November 2016, we were able to grow our subscriber base by 6,000 quarter-to-date through increased data-led promotional activity.”